A Company purchased Assets of the book value of ₹ 12,00,000 and Liabilities of ₹ 2,20,000 of another Company for a purchase consideration of ₹ 9,40,000

A Company purchased Assets of the book value of ₹ 12,00,000 and Liabilities of ₹ 2,20,000 of another Company for a purchase consideration of ₹ 9,40,000. The purchase consideration was discharged by the issue of debentures of ₹ 500 each at a discount of 6%. Pass journal entries in the books of purchasing company. Company writes off all capital losses in the first year itself.

[Ans. Capital Reserve ₹ 40,000; Debentures issued : 2,000 Debentures of ₹ 500 each. Discount on issue ₹ 60,000; It will be written off from Statement of Profit & Loss.]